Privatize the seas? If only solving overfishing were so easy

School of hard knocksIn this month’s Atlantic,Gregg Easterbrook writes that privatizing the seas through use of individualized transferrable quotas (ITQs) is the solution to the grave problem of overfishing. Recently, NOAA Administrator Jane Lubchenco came out strongly (PDF) in favor of ITQs (which the agency is calling “catch shares”), and has committed her agency to “transitioning to catch shares” as a solution to overfishing. Would that the solution to overfishing were so easy!

Today, fisheries managers set a “total allowable catch” (TAC) for open-access fisheries. A fishery is open until that TAC is reached. Not surprisingly, there is often a mad scramble to capture as large a share of fish as quickly as possible. Sometimes fisheries, like the pre-ITQ Alaskan halibut fishery, are only open for a few days, or even a few hours.

Catch shares work to eliminate this incentive to catch all of the fish today. Thus, Easterbrook contrasts the orderly halibut fishery in Alaska today with the free-for-all of the pre-ITQ days. And catch shares do make a fishery more orderly. When a boat has a right to a specified share of the TAC, it removes the incentive to catch each fish before someone else does, the so-called “fisherman’s dilemma.” ITQs seeks to solve this problem by enclosing the commons and creating clear private ownership rights.

I question the assumption, though, that private ownership will convert fisherfolk into stewards of the long-term health of the fishery. As the recent financial collapse has shown, merely having a market with clear private ownership rights does not protect against short-sightedness, misvaluation, and greed–all of which come into play when we talk about overfishing. All ITQs do is remove the economic incentive to catch the full TAQ immediately — they do nothing to address the more structural problems that bedevil fisheries management decisions: the political aspect of nominally scientific resource management decisions and overcapacity in the fishing industry.

First and foremost, catch shares can only be an effective tool to prevent overfishing if fisheries managers set the TAC at an appropriate level. And therein lies the rub. In theory, the TAC is set scientifically, based on applying a fixed harvest rate to the estimate of exploitable biomass in the fishery. But fish recruitment fluctuates based on a host of environmental conditions — rendering the fixed harvest rate problematic. Fishery managers are under intense pressures not to lower a TAC, even when the long-term survival of a fishery depends on reducing or even eliminating fishing pressures. The levels of uncertainty involved in estimating “exploitable biomass in the fishery” make it very difficult to defend decisions with immediate and serious economic impacts.

That brings us to the real problem with fisheries — overcapacity, often subsidized by the very governments Easterbrook accuses of poorly regulating the fisheries. The accusation is correct — fisheries are poorly managed, but I seriously doubt that ITQs are the answer. There are simply too many boats chasing too few fish. The argument that ITQs will result in lower fishing pressure depends heavily on the assumption that as the industry consolidates in the hands of “efficient producers,” those producers will voluntarily retire a portion of their shares. This assumption of producer self-regulation is entirely speculative, and to my mind unlikely. The recent financial crisis is enough to give anyone pause about the ability of markets to self-regulate. Instead, we are likely to see near-monopoly catch-share holders seeking to bend the TAC calculation to their short-term economic interests. This will happen against a backdrop of technical advances that facilitate fishing pressures undreamt of in the past, with immense floating fish processing factories decimating entire fish stocks in one go. It is hard to see how creating a market for trading catch shares will solve this problem.

Fisheries present an unusual set of challenges that make it extremely difficult to have effective regulatory oversight. Regulators have clearly defined geographies of authority but fish do not cooperate by staying in one place. Many fisheries straddle Exclusive Economic Zones (EEZs — waters under the effective control of a coastal state) and the high seas (you may remember that Spain and Canada almost went to war over precisely this issue in the 1990s), rendering ITQs meaningless. The Alaskan Pollock fishery, for example, spans the so-called Bering Sea Donut Hole — a region of the high seas in an area otherwise within the EEZs of the United States, Canada and Russia. Other fisheries straddle the EEZs of more than one state, making decisions about TAC and catch share into international agreements. Even when a fishery is wholly within the EEZ of a single state, most coastal states do not have the capacity to enforce TACs within their jurisdiction, let alone police catch shares.

This is not even to mention bycatch — the dirty little secret of the fishing industry. At least half a million endangered marine mammals (PDF) and an unknown number of endangered sea turtles die every year as bycatch. By most estimates, at least 40% of every catch (PDF) is discarded as bycatch — fish other than the target species. ITQs are likely to exacerbate this problem because it creates a powerful incentive for fishing boats to discard not only unwanted or uncommercial fish, but also any fish potentially subject to someone else’s share.

Moreover, the social justice implications of ITQs are troubling. Privatizing the ocean through ITQs further reinforces the same dynamic we see in other forms of privatization that accompanies development schemes around the world. A strata of society with access to capital, loans and equipment benefits richly but the poor become even poorer because they lose access to traditional resources.

This is not to say that catch shares are necessarily a bad idea, but neither are they a panacea. What’s needed is a cultural change — subsidy removal for fishing fleets, new opportunities for fisher folk, and a recognition that there are real, albeit imperfectly understood, biological limits to ocean ecosystems. Uncertainty argues for precaution in setting TACs, no matter how economically inconvenient that is, and no matter how painful this will be for affected fishing communities in the near-term. There is not always another fish in the sea.